The State of the Steel Industry in 2024

Steel is essential in everything from washing machines and surgical scalpels to airplanes and skyscrapers, making it the most commonly used metal on the planet and a bellwether industry for the global economy. 

Strong and versatile, durable and ductile, steel continues to be at the core of the manufacturing, construction, and automotive industries — but the sector is affected by global issues and faces huge pressure to modernize production and ensure sustainability for the future. 

Let’s explore the state of the steel industry in 2024.

Unprecedented Disruptions

Global steel production took a serious hit when the COVID-19 pandemic and lockdowns descended in 2020. Demand plummeted, with automakers shutting their plants and construction projects paused. 

When the industry rebounded, largely fueled by government stimulus packages, steel mills worldwide faced further challenges, including supply chain disruptions, workforce shortages, delays, and soaring freight costs. Steel prices rocketed, reaching $1,900 a ton, 300% more than pre-pandemic levels.

Just as the industry started to pick up, Russia invaded Ukraine, leading to an energy shortage and price spike and, thus, further turbulence to supply chains and increased costs for raw materials. Ukraine’s domestic steel industry, vital for maintaining its defense capabilities, has also been severely hampered by Russia’s missile attacks on energy infrastructure and labor shortages, with many workers drafted into the army.

Steel Production Today: By the Numbers

After the historic highs of 2021 and 2022, steel prices began falling in 2023 and into 2024. In June, they averaged $723 per metric ton, down 8.2% from the previous month.

The industry is gradually recovering: According to the World Steel Association, steel production has leveled at roughly 1.9 billion metric tons over the past two years.

Over 70% of steel is produced in Asia, mostly in China, where output was around one billion tonnes in 2022 and 2023. The second largest steel producer, India, however, increased production in 2023 by 12% from the year before, and Russia increased by 6%. The U.S. had a slight increase, producing 80 million tons. By contrast, many European countries reported a significant downturn. 

Fluctuating Steel Demand

Despite recent cautious optimism among many manufacturers, it is clear that the steel sector will continue to be influenced by many shifting factors, not least the industries that rely on it.

The automotive industry, for instance, accounts for around 12% of steel demand but is undergoing a significant transformation with the shift toward electric vehicles (EVs). EVs still use traditional steel frames, but manufacturers increasingly call for high-strength steels, alternatives like aluminum or composites, for lighter and more fuel-efficient vehicles.

Meanwhile, construction, which accounts for more than half of total steel consumption, is seeing mixed trends across the globe. The U.S. housing market has slowed, mirroring a similar downtrend in building projects across developed economies, where the focus tends to be on renovation rather than brand-new construction. 

However, in emerging markets, particularly in Asia and Africa, there is robust demand for steel as these regions develop urban areas and build new roads and bridges — though demand here can be sensitive to political instability and economic fluctuations.

Global Politics

Aside from the geopolitical conflicts in Ukraine and the Middle East, factors including overproduction in China and the U.S. presidential election also impact the steel industry. 

The steel market in China is so large that even small policy changes can cause large global ripples. Thanks to the country’s floundering property market, which resulted in a huge surplus of steel, domestic demand dropped 3.3% in 2023 and continues to fall. As a result, it is being exported more cheaply overseas, much to the consternation of international governments. 

In April, President Biden announced plans to triple tariffs on Chinese steel, last year, India imposed an anti-dumping duty, and Thailand has launched a formal investigation into steel imports.

Meanwhile, in the U.S., November’s presidential election may dramatically influence the steel sector. A new administration is likely to reintroduce tariffs on imports to protect the domestic market, while infrastructure spending plans, environmental regulations, and trade policies could also have a significant impact. 

Labor Trends

Despite efforts to attract younger talent and upskill the workforce, the steel industry faces a shortage of skilled workers, especially as the most experienced people retire. 

This challenge is exacerbated by the transition to modernized production: automation and digitalization require workers with new skill sets, which also means putting in place new training and education programs.

Spotlight on Sustainability

Ever-increasing environmental concerns coupled with regulatory pressures from governments and consumer demand for eco-friendly products have thrown the sustainability of steel to the fore. The industry is historically a massive polluter: iron and steel production collectively release about 7-9% of global greenhouse emissions. Decarbonizing steel is a multifaceted process, with carbon capture and storage, recycled materials, alternative power sources, and more efficient processes all playing a part.

The U.S. steel industry has reduced CO2 emissions by 37% since 1990, it recycles more than 14 million tons of steel each year (steel is the world’s most recycled material), and advances in steelmaking technology mean the alloy can be made with less than half the energy required 40 years ago, according to manufacturer Federal Steel Supply. 

More than 70% of the country’s steel is now produced in more energy-efficient electric arc furnaces (EAFs), which use an electric current to melt recycled and scrap steel and iron instead of traditional, coal-fired blast furnaces.

Green Steel

The concept of green steel is gaining traction. This eco-friendly steel is manufactured with low or zero carbon emissions and is largely made in EAFs or hydrogen plants. The world’s first green steel plant in northern Sweden has secured $7 billion in funding and may kickstart operations next year. Fueled by hydrogen produced with renewable electricity, the process will reduce carbon emissions by up to 95% compared with blast furnaces.

Many of the world’s largest steel manufacturers plan to increase their use of electric or hydrogen-powered furnaces. However, producing green steel is expensive, and a report by the NGO Global Energy Monitor has described the journey to decarbonize as stagnant despite being vital if countries are to meet net-zero targets.

Other Steel Tech Innovations

Sustainability and technological innovation come hand in hand. Progress in digitization and automation is improving quality, efficiency, and optimization across the steel sector, enabling, for example, advanced monitoring sensors and predictive maintenance. 

3D printing allows for easier complex and custom steel product production, with less waste and reduced energy consumption. Research and development activity has led to the development of high-strength steels, which are lighter, more durable, and invaluable to automotive and aerospace manufacturers.
The future of steel is likely to see manufacturers continue to integrate transformative technologies into their production processes, giving rise to smart factories that operate with greater flexibility, sustainability, and innovation.